The exodus of HMOs from Medicare is once again leaving thousands of seniors across the country looking for a dwindling number of lower-cost health benefit choices.
In a mass pullout that some speculate was coordinated by the managed-care industry for maximum political impact, at least seven leading HMOs announced plans last week to exit several major Medicare+Choice markets. Once the dust settles, the withdrawals are expected to uproot more than 700,000 beneficiaries, nearly as many as were affected in the past two years combined.
"When health plans pull out of Medicare on such a grand scale, the implications for seniors are tremendous in terms of cost, inconvenience and continuity of care," said Michelle Kitchman, senior policy analyst for the Kaiser Family Foundation, a Menlo Park, Calif.-based healthcare research organization.
Hartford, Conn.-based Aetna U.S. Healthcare, the nation's largest health insurer, led the pullouts, reporting that it will stop offering Medicare HMO coverage in markets in 14 states next year, leaving 355,000 seniors, or more than half its 656,000 Medicare beneficiaries, without HMO coverage.
Perhaps most surprising, though, was Ochsner Health Plan's announcement that it will drop 5,900, or 16%, of its Medicare HMO patients in six Louisiana parishes. The New Orleans-based, provider-owned health plan has long been known for its commitment to the elderly.
"This is a crisis for Louisiana seniors who depend on Medicare+Choice," said George Renaudin, Ochsner Health Plan's senior vice president of administration. "Our decision to withdraw was reached only after much dispute and debate. Unfortunately, we just couldn't make it work in those areas."
All managed-care companies with Medicare businesses must announce by July 3 which markets they will continue to do business in next year.
Medicare covers more than 38 million people nationwide. About 16% of these beneficiaries, or 6.2 million people, are enrolled in HMOs.
Private HMOs proved an attractive option to many seniors because they offered health plans with low premiums and extra benefits not included in the government's traditional Medicare program, such as dental care, prescription drugs and hearing aids.
The Balanced Budget Act of 1997, however, capped hikes in Medicare reimbursements at 2%. The payments aren't keeping pace with rising costs, industry advocates say.
During the past few years, most HMOs have tried to limit their Medicare exposure by selectively withdrawing from less-profitable markets, raising premiums and changing benefit offerings.
But these adjustments haven't been enough, the plans say. HMOs cut 400,000 Medicare members in 1999 and 327,000 this year. According to a survey released last week by the American Association of Health Plans, at least 711,000 seniors will be affected by the latest round of HMO withdrawals.